HOUSTON --
Earlier this week, I had the chance to catch up with Peter
Oosterveer, president of the energy and chemicals (E&C)
segment for Fluor, along with E&C vice president Matthew
McSorley.

The pair spoke to me at the St. Regis Houston, where Fluor
held its annual November media day.

Interview topics included company business as well as
industry topics such as shale gas, crude oil prices and their
downstream and contractor effects.

Highlights of their observations are as follows:

1.) Global industry markets are
behaving the way we expect in 2011,
according to Oosterveer, even though some contractors have expressed uncertainty over second-half
performance. Specifically, Fluor has not seen
any of its major clients with large-scale delays, even amid the
credit crisis in Europe and political instability in
North Africa. For the companys success, Oosterveer
credited Fluors wide geographical spread of projects, which make it not overly
dependent on any one region. Fluors optimism comes amid
struggles from some industry competitors. For example, Shaw
Group recently said it may sell its struggling E&C
business.

2.) The ripple effects of the shale gas wave are just
beginning in the US. Right now, the contractor impact
is somewhat constrained to smaller, mom and
pop-type shops, the executives said. However, that will
change as production is scaled up. Numerous gas processing,
gas-to-liquids and petrochemical projects are presently
in the study phase, Oosterveer said, and may start construction soon. Clients are
getting more serious, he noted.

3.) At least 2-3 new crackers are likely in the US by
the end of the decade. At present, Fluor is tracking
7 or 8 potential new ethylene crackers, according
to Oosterveer. Those include mothballed crackers. Of those
crackers being studied, he predicted two or three will actually
be built, likely by the end of the decade. More additional
capacity would likely come via debottlenecking projects,
Oosterveer added.

4.) Middle East producers arent concerned over
losing market share to US shale  yet. Our
clients arent that concerned, Oosterveer said. He
pointed out that the Middle East has no shortage of available
gas. The only issue is for regulators to make more reserves
available, which could happen if pressure is applied by the
US.

5.) Crude values are unlikely to dip much below
$100/bbl. I cant see crude going
down, Oosterveer said. We agree with those that are
bullish on oil. The executives concurred that natural gas
liquids would remain the economical feedstock of choice.

6.) European shale gas lags behind US due to regulatory
hurdles.Europe is beginning to see some
gas-related projects, such as underground gas
storage. However, on the whole, the region is seeing
flat-to-declining activity, Oosterveer said. One reason is that
potential shale gas reserves are not as developed as in the US.
In the US, you have a drive for energy independence, and
its a little more entrepreneurial, so to speak. Europe
needs the same.

Oosterveer cited numerous government hurdles as obstacles
for shale gas development. He said the European shale gas industry was
unlikely to take off in the next year based on present
dynamics, but easily could at some point within the next
decade.

7.) Australia offers opportunities in LNG.
Fluor is involved in LNG projects such as Santos and Woodside,
and many more could be possible in coming years. The
countrys mining industry is also strong, Oosterveer said.
Making matters better, the competitive battle for contractors
on bids is not as intense as it is in certain other parts of
the world.

8.) Canada puts emphasis on British Columbia as US
watches closely. Within Canada, producers are
increasingly targeting British Columbia for oil sands and other
energy-related plays, McSorley said. Moreover, the US
population continues to show intent and passion for
using Canadian oil. As such, the ultimate fate of the Keystone
XL pipeline  which would transport oil extracted from
Canadian oil sands to refineries in Oklahoma and along the US
Gulf  will be a critical turning point for
the future of the US, McSorley said. A final decision is
expected by the end of 2011.

9.) On the whole, global project operators seek local
services. Were certainly seeing a drive
for more localized businesses, Oosterveer said, noting
that recurring themes included local content, proven capability
and logistics expertise. The executives said that could benefit
companies such as Fluor, who have had international offices for
many years. However, the face of those offices might need to
change. For example, hiring domestic workers in one particular
country could give that office more of a local feel
than someone from another part of the world. Those types of
changes are likely in coming years.

For more details on Fluor, check out their company website
by clicking here.

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